More Mortgages Modified in April, Some Backslide

According to the U.S. Department of the Treasury on Monday, about 295,000 borrowers have been granted permanent mortgage modifications since the beginning of the Making Home Affordable Program.

May 18, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user futureatlas.com

According to the U.S. Department of the Treasury on Monday, about 295,000 borrowers have been granted permanent mortgage modifications since the beginning of the Making Home Affordable Program. About 68,000 of those were trial modifications that converted to permanent ones in April, which was a 13 percent increase compared with March.

Borrowers with permanent modifications are seeing a median reduction in monthly payments of 36 percent, or more than $500, notes the government. Thus far fewer than 4,000 borrowers have dropped out once they achieved permanent modifications.

Not everyone makes it to the permanent status, however. Of the 1.2 million trial modifications started, about 277,000 have been canceled. The main reason is the same reason the mortgage went delinquent in the first place: not enough household income to cover the mortgage, modified or not.

NAHB Housing Market Index Bumps Upward

According to the latest National Association of Home Builders/Wells Fargo Housing Market Index, which was released on Monday, builder confidence in the market for newly built, single-family homes rose for a second consecutive month in May to its highest level in more than two years. The index gained three points to 22 in May, its highest point since August 2007, just before U.S. housing fell into the abyss.

That despite the end of the federal homebuyer tax credit. “Builders are also hopeful that the solid momentum that the tax credits initiated will continue even now that those incentives are gone,” NAHB spokesman Bob Jones predicted hopefully in a statement.

Each of the index’s three component indexes posted three-point gains in May. The component gauging current sales conditions climbed to 23, its highest level since July 2007. Sales expectations in the next six months rose to 28, its highest since November 2009, and the component gauging traffic of prospective buyers improved to 16, its best showing since September 2009.

Let Credit Unions Lend More?

In testimony before the House Subcommittee on Oversight and Investigations on Monday, G. Joseph Cosenza, an owner of Oak Brook, Ill.-based Inland Real Estate Group, spoke in favor of a bill that would allow credit unions to lend more, H.R. 3380, “Promoting Lending to America’s Small Businesses Act.” Currently credit unions may not lend more than 12.25 percent of their total assets; the bill would raise that limit to 25 percent.

“More than half of the outstanding business loans held by credit unions have been extended by those approaching, or at, the cap. That means that credit unions with experience in handling commercial loans are unable to continue helping us get out of this crisis,” Cosenza said, testifying on behalf of National Association of Realtors and the Illinois Association of Realtors. He also spoke in favor of extending TALF.

Wall Street hasn’t been this roller-coaster-like since October 2008. On Monday, the markets dove in the morning, then gyrated on a more-or-less upward track for most of the afternoon, with the Dow Jones Industrial Average ending roughly where it started by eking out a 5.67-point gain, or 0.05 percent. The S&P 500 was up 0.11 percent and the Nasdaq gained 0.31 percent.